(Reuters) The dollar cut its losses on Wednesday as investors further digested the results of the U.S. midterm congressional elections, after an initial sell-off on expectations that the outcome would make further fiscal stimulus measures unlikely.
“I think traders are squaring positions ahead of tomorrow’s FOMC decision,” said John Doyle, vice president of dealing and trading at Monex Consulting.
The Fed is expected to hold rates steady on Thursday, but the language in the policy statement will be watched closely. Fed Chair Jerome Powell is widely expected to raise interest rates in December, which would be the fourth rate hike this year, as U.S. economic fundamentals remain strong.
“The Fed will likely raise rates next month, but that is already priced in so will not likely add any additional support to the dollar,” said Doyle.
“It was our belief that the U.S. dollar move last month was overdone and the greenback is now searching for a new, slightly weaker range against the euro and a handful of other European currencies,” Doyle said.
